Rice industry rushes to disarm single desk critics

06 Sep, 2016 08:20 AM
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The rice industry is rallying its troops to safeguard the last of Australia’s grain “sacred cows” – NSW’s rice export marketing single desk.

Growers are being called to action to lobby hard to retain the monopoly in stark defiance of federal government’s Productivity Commission recently finding “little or no evidence of a sustained and positive price premium for Australian rice exports in world markets”.

Farmers have received pro-forma documents to help them prepare their own submissions to the NSW government by next week in support of the national exporter SunRice keeping its unique status.

While the domestic rice market has been open to numerous local traders and importers for 10 years, about 80 per cent of the nation’s crop is exported by Riverina-based farmer-owned processor, SunRice.

It has the exclusive rights to sell overseas on behalf of the NSW Rice Marketing Board (RMB), which has held compulsory vesting rights over the NSW crop for almost 90 years.

The vast majority of Australian rice grows in southern NSW, although SunRice is also promoting production in North Queensland.

A handful of NSW North Coast producers grow subtropical dryland varieties for the domestic market.

“I want to add another call to action for those of you who support the renewal of vesting and sole and exclusive export arrangements to make a submission,” said SunRice chief executive officer Rob Gordon at last month’s annual general meeting.

Independent calculations suggest SunRice achieved an $82 million price premium for the Australian export crop in 2015 alone because as a single marketer it was not compelled to duplicate export costs, or cut export prices, while vying with other local rivals to win sales in the crowded global rice market.

Mr Gordon said the quantity and quality of pro-vesting submissions would be important in potentially influencing the marketing review, and a final political decision made by the state government.

SunRice chairman, Laurie Arthur, noted 93pc of submissions to the state government’s regular review four years ago supported the rice single desk.

Rice Growers Association of Australia president, Jeremy Morton, said RGA members had “overwhelming” supported the benefits the single desk provided growers and rice growing communities.

“I don’t sense any mood for change among farmers or in political circles,” Mr Morton said

“But we’re definitely not taking the single desk for granted and we’ll certainly aim to get as many submissions supporting our case as possible.”

However, some growers do question the desk's value, including prominent Sydney stockbroker, Colin Bell, whose big Burrabogie Pastoral Company grows rice in South West NSW.

He was a leading opponent in the 2012 review process, arguing the RMB presented "no objective, factual and compelling evidence" to show why growers were better off with SunRice handling all their export crop.

In July the Productivity Commission’s preliminary review of agriculture sector regulation questioned the value the single desk, too, finding the rice industry achieved an annual premium on global markets averaging just $3 a tonne more than equivalent Californian rice between 2003 and 2013.

Similarly it found a premium of just $3t on sales to the Middle East and North Africa (about 36pc of SunRice’s market), but hefty premiums for New Zealand sales (10pc of the market) worth $379/t.

However, in the 24 years between 1989 and 2013t the commission found average international returns were $52/t below the US price and $120/t less for Middle East sales.

It argued single desk rules persisting in the rice industry and at Western Australian Potato Marketing Corporation should be abolished, saying the price premiums achieved were not necessarily evidence of regulated marketing working.

It’s report admitted it was difficult to estimate the extra price value added by SunRice’s export packaging process, but said other price premiums could also be achieved by normal commercial innovation.

RGA’s Mr Morton described the commission’s analysis as “a pretty light look at the rice industry” influenced strongly by a philosophical opposition to regulatory costs.

“It’s always hard to prosecute your case when the economic rationalists don’t want to have a close look at the whole picture,” he said.

“There are significant overseas government restrictions to trading rice, but the single desk helps Australia’s small industry make the most of our export position and create significant value for growers and our regional economy.”

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
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READER COMMENTS

LTF
6/09/2016 11:42:34 AM

History has given stark evidence of the decline in sustainability of family farmers in industries where single desk marketing is removed. For example at its peak under wheat SD, some 50,000 families were in wheat farming. Since deregulatory changes starting in the 1990's & ending early 2000's that number went down to below half. Much worse happened in Dairy where about 60/70% of family dairy farms went out of business. Similar disasters have happened in coarse grains. Farms bankruptcies are now common place and farmers are carrying all the losses. All this as global food demand surges?
Jock Munro
6/09/2016 3:33:30 PM

We now know that the bureaucrats that are in charge of these organisations that recommend deregulation are taking home huge salaries- there are reports of salaries of 800 thousand dollars plus. The rice single desk might be the only one at present but it is only a matter of time that the nation's wheat growers demand theirs back.
Mark2
7/09/2016 5:35:54 AM

This rubbish never goes away does it. You've got research that proves the effectiveness of orderly marketing in controlling duplication of service that is obviously ignored by the productivity (?) commission in favour of their own dubious research comparing Australian exports to selected markets ,in particular the Californian job. If people want an example of the "productivity " gains in the offing in a totally deregulated marketplace , have a good look at the wheat job , the only ones to gain anything are the silo manufacturers and marketing firms flogging dodgy product. We never learn...
Jen
7/09/2016 8:14:55 AM

Just look what has happened to the deregulated wa dairy industry,9 dairy farmers have been told there milk is not wanted.this just not would happen with a regulated system that worked well in the past.
Deregul8
8/09/2016 7:22:15 AM

You blokes still farming? I would have thought the deregulated market would have ruined you by now.
Mark2
8/09/2016 2:19:22 PM

Still around yourself D8, I see, and still with nothing constructive to say
Mark
9/09/2016 3:20:23 PM

It won't be long and Australia will be importing Long life Milk from overseas because what has been done to Dairy. We won't have any Australian Dairy Farmers left. The fall out from the Taking away of the wheat Single Desk has yet to Peak. Sad days ahead with poor leadership decisions destroying whole Industry's and families.

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